How to Prepare My Small Business For The Impact of Coronavirus?
We have had many conversations with our clients and with business owners to talk about the potential impact the Coronavirus might have on small business and in particular, their business.
We've seen anything from people going all out with their planning to the other end of the spectrum where they don't even want to think about because they are scared of what might potentially happen to their business.
Depending on your particular situation the impact that the Coronavirus may have on your business could be severe. Your role as the business owner and CEO is to prepare, think ahead and start running some different scenarios so you are able to respond proactively and with intelligence rather than just being at the effect of the situation.
1. How specifically may the Coronavirus situation impact my small business?
The first question you need to ask yourself is: “How specifically may the Coronavirus situation impact my small business?” The impacts depend on the industry that you're in and your particular situation.
For example, right now we're in early March. It's in the middle of tax season. We have a couple accounting firms that we're working with and their fear really is not so much a drop in sales. Their biggest concern is what will happen if key employees will not be able for extended period of times? Or they need to think about how they could change their operations where most staff would work remotely.
A restaurant owner faces several different frontiers. They need to think about how they would deal with key staff members being affected – especially back of the house personnel. For any owner of a small restaurant that is always a challenge.
Another very realistic scenario is that sales might decrease for a period of time. Restaurants, by default usually work on very slim profit margins and even a small drop in sales could make it difficult to cover overhead expenses.
A third area a restaurant owner will need to think about is how to adjust quickly to customer behavior – we will likely see a big increase in take-out orders and a decrease in dine in guests.
And then another situation is, for example, an Event Planning Company might deal with a lot of cancellations due to the Coronavirus situation and the recommendations to avoid large gatherings. So a business owner needs to be clear how they are going to deal their cancellation and refund policy. They need to look at updating their contracts for events that may happen in the in the summer or the fall, for example?
2. Problem Solve
Next you want to write down the specific question, concerns and challenges you can identify and start thinking about creative solutions to solve them.
Do a brain dump and write things down so your mind can actually start dealing with the actual issues, the actual questions, rather than just being either stuck in fear, paralyzed or just be all over the place with your thinking – not really using your intelligence to do pinpointed and critical thinking.
3. Take Action
Next, you have to take action. As a CEO, it is your responsibility to take care of your business. Revise your strategic plan for the year and come up with Plan B. One of the key takeaways that we've seen in the analysis effect of 2008, 2010 economic downturns is that the businesses that were just slightly ahead in terms of preparing for the economic downturn did exponentially better.
So with a situation like this, if you can take action now and get into start making contingency plans and start moving towards that, the sooner the better, the more the more likely it is for your business to get out of this situation. A few things every business owner should be doing right now is:
Review your Budget and Do Scenario Planning
Take a look at you pro-forma budget, and do some scenario planning. For example, what would your budget look like if sales were to decrease by 15%, by 30%, by 50%? Those are some extreme scenarios, but as business owner, you have to think ahead. Right now, these are hypotheticals, but it's going to allow you to really look at a certain scenario and then start thinking about what are particular actions that you can do now to prepare.
Having the right information is going to allow you to make better decisions already right now.
Monitor Sales and Cashflow Daily
During this time you need to be monitoring your sales on a daily basis, not just monthly or weekly. You need to stay very close to what's happening on it on a daily basis. This will allow you also to make better decisions as it relates to inventory and setting your schedule for your staff. The main goal is should be to not be wasteful in any way. You can’t afford to overspend money on inventory or staff.
Speak With Your Team
During this time it’s important that you bring clarity and leadership to your team. Speak with your staff, go over policies – especially sick leave, working remotely and you’re your business practices are as it relates to cleaning. Don’t let there be any room for assumptions.
Also as a business want to have clear guidelines as it relates to the how your staff is communicating with question that your business is going to get from customers. Instead of people just answer questions based on their own personal interpretation of the situation, you want to make sure that as a company you have a cohesive message.
Identify what the most likely questions are that you are going to get asked from our customers and what is our company's response to those are. Make sure your message calm, clear, educational, and is not one that could be detrimental to your business.
The next area you need to focus on is securing] funding? For most businesses, if revenue is going to go down by, let's say, 30%, it's going to be very difficult to maintain a break-even budget. You have to plan for several months of decrease revenue.
You need to look at how you can fund a few months of loss. Areas to look at are personal lines of credit, business lines of credit, renegotiate terms on current loan payments you are making and negotiating contracts with vendors.
Look For Opportunities to Innovate and Strengthen Relationship with Customers
Another important area to look at is how you can innovate to adapt to changing customer behavior. There is going to be a change in customer behavior. And with that, there's going to be opportunities for you to innovate.
Most businesses have an “established” way that customers interact with the business. Now is a time to seek communication, interact and build relationships with your customers.
There also may be opportunities to explore different revenue streams that maybe weren't feasible before.
Get An Outside Perspective
If you're a business owner that does have a mastermind group or trusted advisers, definitely get outside perspective. It's lonely as a business owner, and sometimes just having an outside perspective can really help you think things through more calmly, ask questions that you might not be thinking about and sometimes come up with solutions that you might not be seeing.
Of course, here at Denver Business Coach we are happy to help. If you would like a one-off consultation for specific situation you want to discuss, we have a team of great coaches here that have gone through a lot and have a lot of experience to bring to this situation.
Please, if you have any questions, put them in the comments, send us a private message, we are here to address them. Thank you.